California Bill Asserts Businesses Generating Up to $18 Million/Year in Sales Need Consumer Protections

California’s AB2116 is proposing to amend the state’s Consumer Financial Protection Law and declare that small businesses generating less than $18 million a year in revenue be considered a consumer for the purpose of consumer financial protections.

“Small business” means a business entity organized for profit with annual gross receipts of no more than sixteen million dollars ($16,000,000) or the annual gross receipt level as biennially adjusted by the Department of General Services in accordance with Section 14837 of the Government Code, whichever is greater.
-AB2116

The DGS alternative, when applied to the “whichever is greater” test, currently sits at $18 million, making that the current applicable baseline for what is small.

“Small business owners are often similarly situated as consumers with regards to their sophistication and bargaining power relative to providers of financial services and products,” the bill says. “Many of the rationales supporting legal protections for consumers apply also to small business owners. Small businesses have a better chance to survive and grow if they are able to access safe and effective financial products and are protected from unfair, deceptive, or abusive practices when accessing financial products and services.”

For comparison’s sake, deBanked tracked one online small business lender that originated $200 million in business loans that generated just $14.3M in revenue. Per the bill, this lender would also be presumed an unsophisticated consumer that is unable to bargain on financial service products without consumer protections.